Top 5 tax saving options for salaried: Tax saving has always been a challenge for the salaried people. They have to plan for their monthly expenses as well as saving, investing and retirement.
The one hit formula says that a salaried person should start tax saving as soon as the Income Tax Return (ITR) filing season begins. Know about 5 such tax saving options, where a salaried person can easily save tax.
EPF: One of the most accurate option
Employees’ Provident Fund (EPF) is one of the simplest tax saving options for salaried people. In this, tax exemption is available up to Rs 1.5 lakh under section 80C of the Income Tax Act. EPF is managed by the Central Board of Trustees (CBT). One thing to keep in mind in EPF is that the interest earned in the PF account is tax free up to Rs 2.5 lakh annually.
NPS: Extra Tax Saving Opportunity
The benefit of tax deduction up to the limit of 1.5 lakh can be availed under section 80CCE of Income Tax on National Pension Scheme (NPS). Apart from this, one can avail additional tax exemption of Rs 50,000 in NPS under section 80 CCD (1B). NPS is helpful in creating a retirement corpus along with saving tax in the long term for the salaried.
FDs: Tax Saver Fixed Deposits
Tax saving FDs of banks are the best option for any job seeker to save tax along with safe investment, guaranteed returns. You can save tax up to Rs 1.5 lakh in banks. It has a lock-in period of 5 years. However, keep in mind that the returns received on maturity of tax saving FDs are taxable.
PPF: A good opportunity to save tax
PPF Public Provident (PPF) is one of the best tax saving option. In this investment along with maturity amount and interest is also tax free. That is, along with investment in it, the amount of fund and interest received on maturity, all three remain tax free. This is a better way to make a safe investment and build a large fund in the long term. 1.50 lakh tax deduction is available under section 80C on investment in PPF account.
ELSS: Tax Saving Option from Market
You can also save tax from the market by investing in mutual funds. You will get the benefit of tax deduction under section 80C on investment in Equity Linked Savings Scheme (ELSS) of Mutual Funds. There is tax saving with better returns on ELSS. Due to the double benefit, it is a popular tax saving instrument among the salaried people.
